Hogs
Price action: December lean hogs fell 7 1/2 cents to $86.10, near mid-range and hit a six-week-low early on.
Fundamental analysis: The lean hog futures market paused today, amid support from a rally in the cattle futures markets. Still, last week’s price downdraft did produce serious near-term chart damage to suggest a market top is in place. Selling interest was limited today due to lean hog futures’ discounts to the cash hog index.
Cash and fresh pork fundamentals have been weakening. The latest CME lean hog index is down 60 cents at $101.42. Thursday’s projected cash hog index is down another 72 cents at $100.70. Today’s national direct 5-day rolling average cash hog price quote is $98.35. The noon report today showed pork cutout value down 77 cents to $105.26, led by losses in hams and bellies. Movement at midday was good at 227.76 loads.
Technical analysis: December lean hog futures bears have the overall near-term technical advantage. A rare and bearish broadening pattern has formed on the daily bar chart, to also suggest a market top is in place. The next upside price objective for the hog bulls is to close December futures prices above solid chart resistance at $90.00. The next downside price objective for the bears is closing prices below solid technical support at $84.00. First resistance is seen at this week’s high of $87.80 and then at $89.00. First support is seen at today’s low of $85.475 and then at $84.00.
What to do: Get current with feed coverage.
Hedgers: You are carrying all production risk in the cash market.
Feed needs: You should have all your soymeal needs covered through December in the cash market. For corn, you now have all needs through October covered in the cash market.
Cattle
Price action: December live cattle rose $1.15 to $238.875, nearer the session high and hit a three-week high. November feeder cattle rose $4.675 to $368.825, nearer the daily high and hit a contract and record high today.
Fundamental analysis: The feeder cattle futures market led gains in the cattle futures today, as the bulls have once again shown incredible resilience after the bulls were left for dead in mid-September. The live cattle futures bulls still have some stiff overhead technical resistance levels to overcome in order for new for-the-move highs to occur.
USDA today reported very light cash cattle trade taking place at an average of $230.00 for steers and $228.00 for heifers. Cash cattle trading last week averaged $230.76. That’s down $1.89 from the prior week’s average of $232.65. The noon report today showed wholesale boxed beef cutout values mixed, with Choice-grade up $1.40 to $367.37, while Select fell $3.50 to $345.38. Movement at midday was decent at 87 loads. The Choice-Select spread is presently $21.99.
Technical analysis: The live and feeder cattle futures bulls have the firm overall near-term technical advantage. However, there are strong chart resistance levels that lie just above present prices for December live cattle. The next upside price objective for the live cattle bulls is to close December futures above resistance at the contract high of $243.575. The next downside technical objective for the bears is closing prices below solid technical support at the September low of $230.075. First resistance is seen at today’s high of $239.325 and then at $241.35. First support is seen at $235.00 and then at this week’s low of $233.75.
The next upside price objective for the feeder bulls is to close November futures prices above technical resistance at $375.00. The next downside price objective for the bears is to close prices below solid technical support at this week’s low of $355.15. First resistance is seen at today’s contract high of $369.50 and then at $372.50. First support is seen at today’s low of $364.85 and then at $360.00.
What to do: Get current with feed coverage. Carry all production risk in the cash market for now.
Hedgers: Carry all production risk in the cash market for now.
Feed needs: For soymeal, you have full coverage in cash through December. For corn, you have all needs through October covered in the cash market. Be prepared to make additional purchases if value prices continue.